In November last year Customs calculated the revenue loss for the previous year from fraud on petrol and diesel could be anywhere between £450m and £980m in the UK, including up to £380m in Northern Ireland.

A National Audit Office report also published today said Customs should make every effort to combat the fraud, not only for the duty lost but also for the threat posed to health and safety.

The most common form of fraud on the UK mainland was the illegal use of rebated fuels in road vehicles.

So-called ‘red’ diesel, which is chemically marked to aid detection, is available for use in certain industries, such as agriculture, but fraudsters sell the fuel for use in on-road diesel vehicles.

In Northern Ireland, the major threat of fraud comes through smuggling fuel across the border with the Republic of Ireland – Customs estimate that out of 700 filling stations in Northern Ireland, as many as 450 sell illegal fuel to some extent.

Sir John Bourn, head of the NAO, said: ‘The estimated revenue losses from the misuse and smuggling of hydrocarbon oils duty reveal that growing sums of revenue are being lost the smuggling and the illegal use of rebated fuel.’